Happy Holidays Ahead: Sales Forecast To Rise 4%

Doom, gloom and store closures may still be blanketing the retail landscape, but Deloitte is predicting merry holidays, with sales expected to rise between 4 and 4.5% compared to last year. And the International Council of Shopping Centers expects to see an increase of 3.8%.

Both predictions come at a transitional time for the industry. Toys R Us is the latest casualty, filing for bankruptcy earlier this week, and experts keep tossing phrases like “retail apocalypse” around as casually as “Buy one, get one free.”

But that misses the bigger picture, says Rod Sides, vice chairman, Deloitte LLP and U.S. retail and distribution sector leader. “We are having a structural reset in the industry,” he says. “We have way too many stores and too much of a retail footprint. But consumers are still spending — and at a high clip. Just because we’re over-retailed doesn’t mean people aren’t shopping.”



Deloitte expects total holiday sales, seasonally adjusted and excluding cars and fuel, to hit between $1.04 trillion and $1.05 trillion in the November-to-January period, compared with $1 trillion spent in the 2016 season, according to the U.S. Commerce Department. E-commerce sales are predicted to rise between 18 and 21% to between $111 billion and $114 billion during the 2017 holiday season, compared to $93.8 billion last year. And while sales in physical stores are expected to gain at the much lower rate of 2% or so, he says, “physical stores are also alive and well.”

It’s basing its projections on growth in personal income, strong consumer confidence, a healthy labor market and low-but-stable personal savings rates.

Of course, where consumers will spend all that green is the big question, he tells Marketing Daily. “Retail really is thriving, giving consumers many options.” And while that’s great news for gift-givers, it will likely pressure retailers into a more promotional holiday season, lowering prices to woo shoppers.

The International Council of Shopping Centers also released its prediction, forecasting a 3.8% climb in retail sales, with its research indicating people plan to spend $728.40 each, on average, on gifts and other holiday-related items. It says 96% of the shoppers in its 2,000-person survey intend to make a purchase from a retailer with both a physical and an online presence, and 91% — and 92% of Millennials — plan to buy something at physical locations. Some 40% say they plan to buy items online and pick them up in the store.

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